- If you're building a SaaS business
and you are unsatisfied with the rate of growth.
If you're a little worried
on whether you'll be able to raise that next round.
If you're looking to adjust to this
new and economic environment.
In this episode, I'm gonna be walking through
the three metrics to look at
on how you can figure out
how to re-pivot your business
to focus on the right areas
so you can accelerate growth.
Intro.
(upbeat music)
- What's up everybody, welcome to unstoppable.
On this channel, I bring you an episode
every Sunday and every Wednesday
to help SaaS startup founders like you
build an unstoppable strategy
and accelerate your growth.
Be sure to hit that subscribe button
and that bell icon,
so I bring an episode with the TK energy
every Sunday and Wednesday
and you will not want to miss it.
So if you're a startup founder
and you're not quite happy with your growth.
If you're worried about raising
that next round of funding.
If you're trying to figure out
how to focus in on the right areas,
on this video, I'm gonna be walking you through
the three metrics to actually dig into.
These three are the most important metrics,
out of a total 10 metrics that I look at,
every single time I diagnose a SaaS business.
So if you're excited to dig in,
smash that like button for the YouTube algorithm
and let's go into the first one.
So every single time I get brought into a SaaS business,
the first metric that I really wanna look at
is the feature usage by market segment.
The feature usage by market segment,
I usually visualize it where each of these are features
and I split them up by in terms of usage,
number of times people are using it everyday
based on market segment.
The power in this is,
a lot of startup founders that I meet, that I work with,
they're starting with a product
and it really builds out a pretty wide feature set.
And a lot of are different angles
in which people are using the product.
But every single time I diagnose a SaaS business,
this was true for Tout app,
this was true for Marketo.
Whenever I looked at the business,
I found there was one or two features
that was the lion share,
they were the 80 percent
of what really brought the value to the product.
And when you start to look at that,
split by market segment,
if you can filter it by different segments
of the market you're serving,
you'll start to understand
which aspect of your product,
which aspect of your platform
is really driving the growth.
Now with the other metrics that I show you,
you'll see that market segmentation
is gonna be an important group by.
The reason I always group by market segment is,
as startup founders,
you again start really wide.
You try a number of different features
and you add a bunch of features
and you also try to bring in as many users
and costumers as possible.
The trick to actually growing faster
is honing in on that one feature
that works really well
for that one market segment that works really well.
Now I keep the definition of market segment
a little loose in the beginning.
You can do it based on SMB,
like small mid-market or enterprise,
or you can do it more around user personas
and costumer personas.
And that's something that you can think about
but an important part
is you group your customers into segments
that logically make sense
and you'll look at your feature usage across the platform.
Once you looked at the feature usage,
the next thing I look at, again,
based on market segment
is the LTV.
The LTV is one of my most favorite metrics
because once you have enough data on a business,
which you should if you have enough revenue so far,
you'll start to understand
who are your most profitable costumers.
Who are the costumers that buy the most
and stay the longest.
And essentially, the higher the LTV,
the better off these costumers are.
So I like to break down the LTV
based on specific market segments.
And when you start to do that,
instead of just looking at a broad LTV number,
you can start to see which type of customers,
which segment of your costumer base,
in your broad costumer base,
tends to be the most profitable.
Before I go to principle number three,
let me just pause here for a second.
I said I'd give you the three metrics
out of 10 that I look at.
If you starting to see a pattern in this,
you're pretty smart I'd say
and if you're starting to see the pattern,
in case you're not seeing it yet,
the pattern here is that,
my thesis around diagnosing SaaS businesses
is that they start pretty wide.
They start with a wide number of features,
they start with a wide number of users,
they start with a pretty wide ICP,
just to see what sticks.
And that alone can get you
to maybe a million, three million, 10 million ARR.
But if you really try to scale
and really go the distance,
the name of the game becomes segmentation.
The name of the game becomes focus,
the name of the game in any business,
not just SaaS businesses,
is actually figuring out the few things
that work really well
and to double down on that
so you can scale faster.
This is why I look at
features that are being used
so that I can cut certain features
that are no longer being used.
This is why I look at the LTV
so I can cut out certain markets,
and certain global market motions
that aren't being used.
If you're starting to see the magic in this,
if you're starting to see how,
focusing on fewer things
can actually help you grow faster,
can I just get a yes in the comments below
or just smash that like button for the YouTube algorithm.
Now let me go onto principle number three.
Principle number three is,
I wanna see churn by reason
again broken down by market segment.
Now if you're not tracking this, that's okay.
I bet you can get your CSMs
or your costumer success leader into a room,
go through the last 100 churns that you had,
or however number you've had
and hopefully it's not a lot.
And you can actually assign reason codes.
Reason codes include they left for the competition,
reason code includes cut of budget,
reason code includes change of leadership.
Any number of those reason codes are great
but again, you want to allocate
how many dollars you lost
because of churn based on each of those reasons
and again you wanna break it down
across market segments.
Now these are just the three metrics
out of 10 that I look at,
when diagnosing a SaaS business.
So to recap, the first one I look at
is what features are actually getting used
the most, again, by market segment.
The second thing I look at
is who are the most profitable costumers
based on LTV, again, based on market segment.
And number three, I look at,
is who are the people that are leaving
and why, again, based on market segment.
These are just three metrics that I look at
and you can start looking at right away
to understand how to actually craft
a growth strategy for your SaaS business.
How to actually figure out,
which part of your business is actually working better
than the rest of them,
so you can pivot in your focus
and grow faster by doubling down on what's working.
That is the secret to scaling.
Now if you're interested in working with me,
to actually diagnose your SaaS business
and craft a growth strategy,
then I'll include a link down below
where you can book a strategy call with me.
Or you can just go to tkkader.com/apply
and in there you just answer a couple questions
and we'll get on a strategy call
and we'll figure out if my 10 point framework
for actually diagnosing a SaaS business
can help you guys actually grow faster
in any economic environment.
If you like this video,
please be sure to smash that like button.
Also I drop an episode like this
every Sunday and every Wednesday
to help startup founders like you
create and execute on an unstoppable strategy
for your SaaS business.
So be sure to hit that subscribe button
and that bell icon.
And if you have a friend who's also a founder
and can get value from this video,
please share it with them.
If you're part of a slide group or an email list,
share it there as well,
it would mean the world to me and my team.
And lastly remember,
everyone needs a strategy
for their life and their business
but when you are with us,
yours is gonna be unstoppable.
I'm TK and I will see you in the next episode.
(happy music)